<PAGE>
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___ TO ___
COMMISSION FILE NO: 0-20612
----------------------
JUST TOYS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------------
DELAWARE 13-3677074
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
50 WEST 23RD STREET, NEW YORK, NEW YORK 10010
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(212)645-6335
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS TO
BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS(OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
--- ---
THE AGGREGATE NUMBER OF THE REGISTRANT'S SHARES OUTSTANDING ON
MAY 13, 1996 WAS 4,150,000 SHARES OF COMMON STOCK, $.01 PAR VALUE
<PAGE>
<PAGE>
JUST TOYS, INC. AND SUBSIDIARIES
INDEX
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Item 1. FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets - March 31, 1996
and 1995 (unaudited) and December 31, 1995........................1
Condensed Consolidated Statements of Operations (unaudited)
for the Three Months Ended March 31, 1996 and 1995................2
Condensed Consolidated Statements of Cash Flows (unaudited)
for the Three Months Ended March 31, 1996 and 1995............. ..3
Notes To Condensed Consolidated Financial
Statements (unaudited)............................................4
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.....................6
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K..................................9
SIGNATURES .................................................................10
</TABLE>
<PAGE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
JUST TOYS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31, 1995
------------------------------ ------------------
1996 1995
--------- -------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash...................................... $ 430,725 $ 2,010,004 $ 241,443
Marketable securities..................... -- 737,043 --
Accounts receivable, net of allowances
of $875,000, $1,076,000 and $1,017,000
(Note B)................................ 881,142 2,213,128 1,779,598
Inventories (Note C)...................... 2,735,097 3,711,188 3,270,206
Prepaid and refundable income taxes....... 24,368 264,901 248,459
Prepaid expenses and other current assets. 932,598 2,239,003 646,422
----------- ------------ ------------
Total current assets.................. 5,003,930 11,175,267 6,186,128
Property and equipment, at cost, net of
accumulated depreciation and
amortization.............................. 2,521,507 3,304,653 2,653,702
Property held for sale (Note F)............ 2,907,340 3,908,840 2,907,340
Other assets............................... 91,112 285,764 76,188
----------- ------------ ------------
TOTAL.................................. $10,523,889 $18,674,524 $11,823,358
=========== =========== ===========
LIABILITIES
Current liabilities:
Current portion of long-term debt....... $ 360,000 $ 328,000 $ 360,000
Accounts payable......................... 885,994 2,714,492 1,925,467
Due RGA Accessories, Inc. ............... 52,850 65,640 45,242
Accrued liabilities...................... 1,266,970 2,029,184 1,582,761
Deposit received for property held for
sale.................................... 633,398 -- --
----------- ------------ ------------
Total current liabilities.............. 3,199,212 5,137,316 3,913,470
----------- ------------ ------------
Long-term debt, less current portion....... 1,796,000 2,156,000 1,886,000
Deferred income taxes...................... 15,971 15,971 15,971
----------- ------------ ------------
Commitments and contingencies (Note E).....
TOTAL.................................... 5,011,183 7,309,287 5,815,441
----------- ------------ ------------
STOCKHOLDERS' EQUITY
Stockholders' equity: (Note D)
Preferred stock, $1.00 par value,
1,000,000 shares authorized, 120,000
issued and outstanding................. 120,000 -- 120,000
Common stock, $.01 par value, authorized
15,000,000 shares; 4,150,000
issued and outstanding ................ 41,500 41,500 41,500
Additional paid-in capital............... 29,795,768 29,795,768 29,795,768
Unrealized gain on marketable securities -- 2,449 --
Accumulated deficit...................... (24,444,562) (18,474,480) (23,949,351)
----------- ----------- -----------
Total stockholders' equity............ 5,512,706 11,365,237 6,007,917
----------- ----------- ----------
TOTAL................................. $10,523,889 $18,674,524 $11,823,358
=========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these
Condensed Financial Statements.
Page-1-
<PAGE>
<PAGE>
JUST TOYS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
---------------------------------
1996 1995
---- ----
(UNAUDITED)
<S> <C> <C>
Net sales............................. $ 4,173,874 $ 4,414,153
Cost of goods sold.................... 2,764,143 3,011,703
----------- ----------
Gross profit.......................... 1,409,731 1,402,450
----------- -----------
Expenses:
Merchandising, selling, warehousing
and distribution................... 441,513 1,641,503
Royalties........................... 155,997 289,189
General and administrative.......... 1,261,617 2,144,966
----------- -----------
Total............................. 1,859,127 4,075,658
----------- -----------
Operating loss........................ (449,396) (2,673,208)
Interest & dividend income............ 3,242 49,755
Interest expense...................... (121,452) (64,198)
Write down of investment
in Hong Kong property (Note F)...... -- (576,500)
Other income (expense)................ 72,395 (47,902)
------------ ------------
Net loss.............................. $ (495,211) $ (3,312,053)
=========== ============
Per share data:
Net loss per common share........... $(0.12) $(0.80)
====== ======
Weighted average common shares
outstanding.......................... 4,150,000 4,150,000
=========== ============
</TABLE>
The accompanying notes are an integral part of these
Condensed Financial Statements.
Page-2-
<PAGE>
<PAGE>
JUST TOYS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-----------------------------
1996 1995
---- ----
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net loss .................................................................... $ (495,211) $(3,312,053)
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
Depreciation and amortization ........................................... 167,025 431,492
Write down in investment in Hong Kong property .......................... -- 576,500
Realized and unrealized gain on marketable securities ................... -- (83,660)
Changes in operating assets and liabilities (net of the effects
of the acquisition of Celt Specialty Partners, Inc. in 1995):
(Increase) decrease in:
Accounts receivable ............................................... 898,456 159,240
Inventories ....................................................... 535,109 800,110
Prepaid and refundable taxes ...................................... 224,091 (199,102)
Prepaid expenses and other current assets ......................... (286,176) (362,594)
Other assets ...................................................... (14,924) (155,572)
Increase (decrease) in:
Accounts payable .................................................. (1,039,473) (14,968)
Due RGA Accessories, Inc. ......................................... 7,608 (49,293)
Accrued liabilities ............................................... (315,791) (961,806)
Income taxes payable .............................................. -- (473,422)
----------- -----------
Net cash (used in) operating activities .................................... (319,286) (3,645,128)
----------- -----------
Cash flows from investing activities:
Deposit received for property held for sale ................................. 633,398 --
Acquisition of property and equipment ....................................... (34,830) (297,243)
Purchase of marketable securities ........................................... -- (2,741,107)
Redemption of marketable securities ......................................... -- 6,603,176
----------- -----------
Net cash provided by investing activities ........................ 598,568 3,564,826
----------- -----------
Cash flows from financing activities:
Payments of long-term debt .................................................. (90,000) (78,000)
----------- -----------
Net cash (used in) financing activities .......................... (90,000) (78,000)
----------- -----------
Net increase (decrease) in cash ................................................ 189,282 (158,302)
Cash-beginning of period ....................................................... 241,443 2,168,306
----------- -----------
Cash-end of period ............................................................. $ 430,725 $ 2,010,004
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
Condensed Financial Statements.
Page-3-
<PAGE>
<PAGE>
JUST TOYS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note A - Basis of Presentation and Summary of Significant Accounting Policies
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for fair presentation have been included. On
April 23, 1995, the Company purchased the remaining 50% joint interest in Celt
Specialty Partners, Inc. ("Partners") which was organized on June 7, 1994. The
accounts of Partners are consolidated with the Company from January 1, 1995
because of the Company's direct and indirect degree of control. The results of
operations for the interim periods are not necessarily indicative of the results
for a full year. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1995.
(1) Loss per share of Common Stock
Loss per share is based on the weighted average number of shares
outstanding during each period, including Common Stock equivalents, when
dilutive. Primary and fully diluted loss per share are the same for each period.
(2) Reclassifications
Certain previously reported amounts have been reclassified to conform to
the 1996 presentation and that of the Form 10K for the year ended December 31,
1995.
Note B - Accounts Receivable
Accounts receivable and amounts due from factor consist of the following:
<TABLE>
<CAPTION>
March 31, March 31, December 31,
1996 1995 1995
-------- -------- -----------
(Unaudited)
<S> <C> <C> <C>
Accounts Receivable - factor........................... $3,149,383 $ 3,206,600
Borrowings from factor................................. (1,825,396) (881,024)
---------- -----------
Net due from factor ................................... 1,323,987 2,325,576
Accounts receivable - trade ........................... 432,155 $ 3,289,128 471,022
---------- ----------- -----------
Total accounts receivable .......................... 1,756,142 3,289,128 2,796,598
Less: Accounts receivable allowances .................. (875,000) (1,076,000) (1,017,000)
----------- ----------- -----------
Total accounts receivable net of allowances ........ $ 881,142 $ 2,213,128 $ 1,779,598
=========== =========== ===========
</TABLE>
Page-4-
<PAGE>
<PAGE>
Note C - Inventories
The inventories consist of the following:
<TABLE>
<CAPTION>
March 31, March 31, December 31,
1996 1995 1995
-------- -------- -----------
(Unaudited)
<S> <C> <C> <C>
Finished goods .......................... $1,526,496 $2,497,515 $2,178,278
Material components and supplies ........ 1,208,601 1,213,673 1,091,928
---------- ---------- ----------
Total .......................... $2,735,097 $3,711,188 $3,270,206
========== ========== ==========
</TABLE>
Note D - Stockholders' Equity
Stockholders' equity consists of the following:
<TABLE>
<CAPTION>
Additional
Preferred Common Paid-in Accumulated
Stock Stock Capital Deficit Total
---------- ------ ---------- ------------- ------
<S> <C> <C> <C> <C> <C>
Balance December 31, 1995 $120,000 $41,500 $29,795,768 $(23,949,351) $6,007,917
Net loss (unaudited) (495,211) (495,211)
-------- -------- ----------- ------------ ----------
Balance March 31, 1996
(unaudited) $120,000 $41,500 $29,795,768 $(24,444,562) $5,512,706
======== ======= =========== ============ ==========
</TABLE>
Note E - Commitments and Contingencies
Litigation
A lawsuit was commenced against the Company and certain other defendants in
April 1995 by OddzOn Products, Inc. in the United States District Court for the
Northern District of California alleging that the Company's Micro Ultra Pass and
Ultra Pass infringed a design patent owned by the plaintiff and constituted
trade dress infringement and unfair competition. The action seeks compensatory
damages in excess of $2,800,000. The Company does not believe that its products
infringe any rights of the plaintiff, and intends to contest this action
vigorously and does not believe the action will have a material adverse affect
on the financial condition or operations of the Company.
Note F - Property Held for Sale
Because the Company decided to sell its property in Hong Kong, the book
value of the property was written down by approximately $577,000 in the first
quarter of 1995 to reflect management's estimate of the net proceeds from the
sale. In March 1996, the Company entered into a provisional sale agreement for
the sale of this property. In the fourth quarter of 1995, the Company wrote down
the value of the property by an additional $1,001,000 based on the selling price
per the sales agreement. The transaction closed on April 30, 1996.
Page-5-
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
RECENT DEVELOPMENTS
On January 22, 1996, the Company executed an agreement (the "Acquisition
Agreement") to purchase certain assets of Table Toys, Inc. ("Table Toys" and the
"Table Toys Acquisition"). Table Toys manufactures, distributes and sells a line
of play tables which are compatible with most brands of toy construction blocks
and a line of toy construction blocks. Table Toys has filed a petition under
Chapter 11 of the Federal bankruptcy laws and has submitted the Acquisition
Agreement as part of its plan of reorganization. The Acquisition Agreement has
been approved by the Bankruptcy court, subject to the issuance of a final order.
Concurrent with the Acquisition Agreement, the Company and Table Toys executed a
Marketing and Distribution Agreement, which enabled the Company, pending
bankruptcy court approval and consummation of the Table Toys Acquisition, to
market and sell the Table Toys products. The purchase price will be paid in a
combination of cash, convertible preferred stock and warrants to buy the
Company's common stock. On February 1, 1996, the Company acquired the toy line
and the rights to use the "Welsh" name for toys from Welsh Company, Inc.
("Welsh"). The Welsh toy line consists of doll furniture and doll carriages and
strollers. The Company is currently marketing the product line of Brik, Inc.
("Brik") pursuant to a Marketing and Distribution Agreement dated February 7,
1996. The Brik product line consists of play tables and toy construction blocks
similar to those of Table Toys but aimed at lower price points. The Marketing
and Distribution Agreement will remain in effect until such time as the Company
has completed the acquisition of the assets of Brik or the Company has
determined that the acquisition should not go forward. Management believes that
the cash outlays required for these acquisitions are not significant.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
Net sales for the three months ended March 31, 1996 decreased 5.4% to
$4,174,000 from $4,414,000 in the comparable period in 1995. Net sales of the
Company's Sports Toys increased 15.2% to $2,844,000 from $2,470,000 in the
comparable period in 1995. This increase was offset by a decrease in the Toys
Category of 31.6% from $1,944,000 in the first three months of 1995 to
$1,330,000 in the same period of 1996. Sales credits in the three month period
ended March 31, 1996 (in the form of returns, advertising and other allowances
and concessions to retailers) were 4.5% of net sales as compared to 9.0% of net
sales in the comparable 1995 period. This decrease is a result of a shift in the
Company's product mix away from toys based on licensed characters, which toys
generally have a relatively brief life span, to products that have greater long
term strength and appeal.
Gross profit increased 0.5% to $1,410,000 from $1,402,000 in the comparable
period in 1995. Gross profit as a percentage of net sales was 33.8% compared to
31.8% for the three months ended March 31, 1995. This increase resulted
primarily from lower sales credits in the 1996 period as compared to the same
period in 1995.
Merchandising, selling, warehousing and distribution expenses decreased
73.1% to $442,000 as compared to $1,642,000 in the comparable 1995 period. The
sharp decrease is a result of the cost reduction program initiated in the second
quarter of 1995 as well as unusually high expenditures incurred in the first
quarter of 1995. The cost reduction measures reduced costs associated with
product design and development related costs as well as advertising and
warehouse/distribution expenses. As a percentage of net sales, merchandising,
selling, warehousing and distribution expenses
Page-6-
<PAGE>
<PAGE>
decreased to 10.6% from 37.2% in the comparable period in 1995, a result of a
decrease in absolute dollars.
Royalties decreased 46.1% to $156,000 from $289,000 in the three months
ended March 31, 1995. The decrease reflects the change in the Company's product
mix away from character licensed products which carry higher royalty rates than
branded products and products obtained from third party inventors. As a result,
royalties, as a percentage of net sales, decreased to 3.7% from 6.6% in the 1995
period.
General and administrative expenses decreased 41.2% to $1,262,000 from
$2,145,000 in the comparable period in 1995 due to a decrease in the number of
personnel, decreased depreciation and amortization and a decrease in fees for
RGA's services for the period. As a percentage of net sales, general and
administrative expenses decreased to 30.2% from 48.6% due to the decline in
general and administrative expenses. The estimated cost of $303,000 associated
with the implementation of a significant workforce reduction and a restructuring
of the Company's operations was provided for in the quarter ending March 31,
1995.
Operating loss decreased to $449,000 from $2,673,000 in the comparable
period in 1995.
The Company earned interest and dividend income of $3,000 as compared to
$50,000 in the comparable period in 1995. The decrease in interest and dividend
income is a result of the Company having redeemed marketable securities during
1995. Interest expense increased to $121,000 as compared to $64,000 in the
comparable period in 1995. This increase was due primarily to the Company having
drawn advances under its factoring arrangement.
Because the Company decided to sell its property in Hong Kong, the book
value of the property was written down by approximately $577,000 in the first
quarter of 1995 to reflect management's estimate of the net proceeds from the
sale. In March 1996, the Company entered into a provisional sale agreement for
the sale of this property. In the fourth quarter of 1995, the Company wrote down
the value of the property by an additional $1,001,000 based on the selling price
per the sales agreement. The transaction closed on April 30, 1996.
Net loss was $495,000 as compared to $3,312,000 in the comparable period in
1995. Net loss per common share decreased to $0.12 from $0.80 on 4,150,000
weighted average shares outstanding in the three months ended March 31, 1996 and
1995, respectively.
OTHER INFORMATION
The business of the Company is characterized by customer order patterns
which vary from one year to the next largely because of the different levels of
consumer acceptance of a product line, product availability, marketing
strategies and inventory levels of retailers. The use of just-in-time/quick
response inventory techniques and replenishment programs by larger retailers has
resulted in fewer orders being placed in advance of shipment. This distorts the
comparisons of unshipped orders at any given date. Additionally, it is a general
industry practice that orders are subject to amendment or cancellation by
customers prior to shipment. Therefore, comparisons of unshipped orders in any
specific period in any given year with those same periods in preceding years are
not necessarily indicative of sales for an entire year. The Company's unshipped
orders were approximately $1,673,000 at March 31, 1996 compared to approximately
$1,717,000 at March 31, 1995.
Page-7-
<PAGE>
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at March 31, 1996 was $1,805,000 as compared
to $6,038,000 at March 31, 1995.
Cash provided by investing activities was $599,000 in the period ending
March 31, 1996, which was attributable to the deposit received on account of the
sale of the Company's Hong Kong property, partially offset by an investment in
equipment, molds and tooling for new products. In the comparable period in 1995,
cash provided by investing activities was $3,565,000, consisting primarily of a
net redemption of marketable securities, partially offset by an investment in
equipment, molds and tooling for new products.
Cash used in financing activities was $90,000 in the first three months of
1996 and $78,000 in the comparable period in 1995. Cash from financing
activities was used to repay the principal portion of the mortgage on the
Company's facility in Hong Kong.
Effective February 1, 1996, the Company's factoring agreement with Milberg
Factors, Inc. was amended to increase the amount of the advance to the lesser of
85% of total accounts receivable or $5,000,000. The factoring charge is .65% of
receivables. Advances bear interest at the rate of prime plus one percent.
Milberg has also agreed to advance to the Company, at the Company's request, the
lesser of $2,000,000 or 50% of the Company's inventory located in the United
States. Such advances will also bear interest at the rate of prime plus one
percent.
The Company believes that its cash flow from operations, available
borrowings and the proceeds from the sale of its Hong Kong facility will be
adequate to meet its obligations for the year.
SEASONALITY
The toy industry is typically seasonal in nature due to the heavy demand
for toy products during the Christmas season, with the majority of orders being
placed during the first two-thirds of the year for shipment during the third and
fourth quarters, and with the majority of collections from such sales being
received in the fourth quarter.
Page-8-
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
3.1 Certificate of Incorporation, incorporated by reference to
Exhibit 3.1 to the Registration Statement on Form S-1 (File No.
33-50878) (the "Form S-1").
3.2 Certificate of Designations, Preferences and Rights of the Series
A Preferred Stock (included in Exhibit 4 hereof).
3.3 By-laws incorporated by reference to Exhibit 3.3 to the Form S-1.
4 Certificate of Designations, Preferences and Rights of the Series
A Preferred Stock, incorporated by reference to Exhibit 4 of the
Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission on November 7, 1996 (the "1995 3rd
Quarter 10-Q").
27 Financial Data Schedule pursuant to Article 5 of Regulation S-X
filed with EDGAR version only.
(b) Reports on Form 8-K--None
Page-9-
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 13, 1996
JUST TOYS, INC.
a Delaware Corporation
By: /s/ Morton J. Levy
---------------------------------
Morton J. Levy
Chief Executive Officer
By: /s/ Michael J. Vastola
---------------------------------
Michael J. Vastola
Chief Financial Officer
Page-10-
<PAGE>
<PAGE>
EXHIBIT INDEX
3.1 Certificate of Incorporation, incorporated by
reference to Exhibit 3.1 to the Registration
Statement on Form S-1 (File No. 33-50878) (the
"Form S-1").
3.2 Certificate of Designations, Preferences and Rights
of the Series A Preferred Stock (included in
Exhibit 4 hereof).
3.3 By-laws incorporated by reference to Exhibit 3.3
to the Form S-1.
4 Certificate of Designations, Preferences and Rights
of the Series A Preferred Stock, incorporated by
reference to Exhibit 4 of the Quarterly Report on
Form 10-Q filed with the Securities and Exchange
Commission on November 7, 1996 (the "1995 3rd
Quarter 10-Q").
27 Financial Data Schedule pursuant to Article 5 of
Regulation S-X filed with EDGAR version only.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<PERIOD-TYPE> 3-MOS
<CASH> 430,725
<SECURITIES> 0
<RECEIVABLES> 1,756,142
<ALLOWANCES> 875,000
<INVENTORY> 2,735,097
<CURRENT-ASSETS> 5,003,930
<PP&E> 6,888,226
<DEPRECIATION> 4,366,719
<TOTAL-ASSETS> 10,523,889
<CURRENT-LIABILITIES> 3,199,212
<BONDS> 1,796,000
<COMMON> 41,500
0
120,000
<OTHER-SE> 5,351,206
<TOTAL-LIABILITY-AND-EQUITY> 10,523,889
<SALES> 4,173,874
<TOTAL-REVENUES> 4,173,874
<CGS> 2,764,143
<TOTAL-COSTS> 4,623,270
<OTHER-EXPENSES> (75,637)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 121,452
<INCOME-PRETAX> (495,211)
<INCOME-TAX> 0
<INCOME-CONTINUING> (495,211)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (495,211)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
</TABLE>
